Chapter 3: Regulation of Broker-Dealer Agents
This chapter covers 13% of the Series 63 exam (approximately 8 questions) and focuses on the individuals who represent broker-dealers: the agents.
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 1 | Agent Definition and Registration | Agent definition, who is and isn't an agent, Form U4, registration requirements, dual registration |
| 2 | Agent Exemptions and Obligations | Exemptions from registration, post-registration obligations, termination, outside business activities |
Why This Chapter Matters
While Chapter 2 covered the firms (broker-dealers), this chapter covers the individuals who work for them. The exam heavily tests the distinction between the firm's registration and the agent's registration, and the specific exemptions that apply to each.
Understanding who qualifies as an agent is critical because many exam questions present scenarios where you must determine whether a person needs to register as an agent in a particular state.
Exam Strategy
At 13% of the exam, this is a significant section. Focus on:
- Agent definition: An individual who represents a broker-dealer or issuer in effecting securities transactions
- Exclusions: Individuals representing issuers in certain exempt transactions are not agents
- Form U4: The registration form for agents (and IARs) - know what it requires
- Dual registration: Agents must register in each state where they have an office or direct communications to more than a set number of clients
- Termination: Both the agent and the BD must notify the Administrator
Think of it this way: Chapter 2 was about the firm. This chapter is about the people. The exam loves to test whether a specific person in a specific situation needs to register as an agent.